Ip v Chiang

[2021] NSWSC 822

Supreme Court

New South Wales

Medium Neutral Citation:

Ip v Chiang [2021] NSWSC 822

Hearing dates:

2-5, 9-12 and 16-17 November 2020

Decision date:

06 July 2021

Jurisdiction:

Equity

Before:

Lindsay J

Decision:

The deceased estate of Long Sing Ip is entitled to recover property acquired by the first defendant as a constructive trustee.

Catchwords:

EQUITY — Unconscionable conduct — Special disability or disadvantage — Other party’s knowledge — Mental incapacity — First defendant entered into transactions and property dealings with deceased in circumstances where deceased lacked capacity — Estate entitled to recover property acquired by first defendant as a constructive trustee

FAMILY LAW — Marriage — Void marriage — Consent — First defendant purportedly married deceased in circumstances where deceased was incapable of understanding the nature and effect of marriage ceremony

Legislation Cited:

Births, Deaths and Marriages Registration Act 1995 NSW

Civil Procedure Act 2005 NSW

Family Law Act 1975 Cth

Jurisdiction of Courts (Cross-Vesting) Act 1987 Cth

Marriage Act 1961 Cth

Powers of Attorney Act 2003 NSW

Real Property Act 1900 NSW

Succession Act 2006 NSW

Uniform Civil Procedure Rules 2005 NSW

Cases Cited:

AK v NC [2003] FamCA 1006; 32 FamLR 16; [2004] FLC 93-178

Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1

Blomley v Ryan (1956) 99 CLR 362

CJ v AKJ [2015] NSWSC 498

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447

David by her Tutor the Protective Commissioner v David (1993) 30 NSWLR 417

Eberstaller v Poulos [2014] NSWCA 211

Edmunds v Edmunds and Ayscough [1935] VLR 177

Ford (by his Tutor Watkinson) v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42

Giumelli v Giumelli (1999) 196 CLR 101

Grace v Grace [2014] NSWCA 86

Hart v O’Connor [1985] AC 1000

Hayward v Hayward [1961] P 152

Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41

In the Marriage of Miller (1983) FLC 91-328; 9 FamLR 10; 49 ALR 689

Johnson v Buttress (1936) 56 CLR 113

Lampropoulos v Kolnik as Executor of Foley [2010] WASC 193

Law Society of NSW v Weaver [1977] 1 NSWLR 67

Louth v Diprose (1992) 175 CLR 621

Gibbons v Wright (1954) 91 CLR 423

McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) (1904) 1 CLR 243

Muschinski v Dodds (1985) 160 CLR 583

Oliver (deceased) v Oliver [2014] FamCA 57

PB v BB [2013] NSWSC 1223

PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 Petelin v Cullen (1975) 132 CLR 355

Phillips v Robab Pty Ltd [2014] NSWSC 1520; (2014) 110 IPR 184

Privet v Vovk [2005] NSWSC 1258; 195 FLR 191

Protective Commissioner v D (2004) 60 NSWLR 513 Singh v Singh [2018] NSWCA 30

Thompson v Thompson [1957] P 19

Young v Lalic [2006] NSWSC 18; 197 FLR 27

Texts Cited:

Meagher, Gummow and Lehane, Equity Doctrines and Remedies (5th edition, 2015)

Category:

Principal judgment

Parties:

Plaintiff: Xiao Feng Ip as Administrator of the Estate of Lo Sing Ip, deceased
First Defendant: Lisa Tsui Pen Chiang

Representation:

Counsel:
Plaintiff: J Sexton SC and KJ Young
First Defendant: E Cohen

Solicitors:
Plaintiff: Philip Gengos & Co.
First Defendant: Direct Access Brief to counsel

File Number(s):

2018/00312250

Judgment

INTRODUCTION

1. As administrator of the estate of the late Mr Lo Sing Ip (“the deceased”), pursuant to a special grant of administration made on 12 October 2018, Ms Xiao Feng Ip, nee Liang, also known as Lisa Ip (the plaintiff) sues Ms Lisa Tsui Pen Chiang (the first defendant), inter alia, for equitable relief arising from the transfer to her, and her subsequent sale, of the deceased’s residential property being Lot 4 in Deposited Plan 33976 and known as 7 Cooper Street, Redfern (“the Redfern Property”).

2. The focus of the proceedings is upon dealings with the Redfern Property (whereby, in two stages, it was transferred from the name of the deceased into the name of the first defendant); her leasing and sale of the property after it was transferred into her sole name; and her dealings with the proceeds of its sale.

3. The context in which the transactions under examination were effected requires consideration of a range of events, including the following:

1. a disputed marriage between the deceased and the first defendant, ostensibly effected on 3 September 2013 (as a means of facilitating conferral on the first defendant of a one half interest in the Redfern Property as a joint tenant with the deceased) and dissolved on 23 October 2015, following upon the purported making of a “Binding Financial Agreement” dated 6 July 2015 by way of a property settlement pursuant to which the Redfern Property was transferred by the deceased into the sole name of the first defendant on 22 April 2016.

2. a disputed marriage between the deceased (then a nursing home resident) and Ms Lanying Guo (a former mother-in-law of the first defendant) on 26 April 2016, said by the first defendant to have arisen out of a relationship between the deceased and Ms Guo which, she says she reluctantly accepted, had displaced her marital relationship with the deceased during her frequent and lengthy absences from the marital home (the Redfern Property).

3. disputed proceedings in the Guardianship Division of the NSW Civil and Administrative Tribunal (“NCAT”) relating to protective management of the estate, and person, of the deceased, culminating in: (i) orders made by the Tribunal on 26 May 2016 for the appointment of the NSW Trustee as the deceased’s financial manager and the plaintiff as his guardian: and (ii) confirmation of those orders by the Tribunal upon a review conducted on 26 August 2016.

4. execution by the deceased, at the instigation of the first defendant, of sundry documents (including an enduring power of attorney, an enduring guardianship appointment and statutory declarations) in aid of the first defendant’s efforts to take control of the Redfern Property.

4. In essence, the plaintiff contends that the first defendant tricked the deceased (an elderly cognitively impaired widower) into transferring to her his principal asset (the Redfern Property) through the pretence of entry into what, in a non-technical sense at least, can be characterised as a “sham” process of marriage, separation, property settlement and divorce.

5. As these proceedings are presently constituted, the first defendant is the only defendant against whom the plaintiff claims relief. By orders made on 3 July 2020 (which provided for settlement moneys to be paid into court), the plaintiff settled compensation claims made against:

1. Mr Michael Li (the second defendant), a conveyancer;

2. Ren Zhou Group Pty Ltd (the third defendant), an incorporated law practice, and Ms Ying Zhang (the fourth defendant), its employee; and

3. Juri Cor Group Pty Ltd (the fifth defendant), an incorporated law practice.

6. Each of those parties acted in the course of a professional practice (as a conveyance or solicitor) in transactions purportedly between the deceased and the first defendant. As the deceased’s representative, the plaintiff sued each of them for compensation for breaches of duty allegedly owed by them respectively to the deceased’s estate. Against each of them the plaintiff negotiated a settlement.

7. By the orders made on 3 July 2020, the second defendant agreed to pay $116,667.00 in full and final settlement of the estate’s claim against him; the third and fourth defendants agreed to pay to the plaintiff the sum of $466,666.00 in full and final settlement of the estate’s claims against them; and the fifth defendant agreed to pay the sum of $116,667.00 in full and final settlement of the estate’s claims against it.

8. The Court’s orders provided that, upon payment of those sums by the second to fifth defendants, the proceedings against them were dismissed, with no orders as to costs, the intent being that each party would bear their own costs of the proceedings.

9. The orders provided for settlement sums (totalling $700,000.00) to be paid into court, to be held by the Court until further order, in these proceedings or in the proceedings numbered 2019/00290122 in the Probate List of the Court.

10. The sum of $700,000, plus accrued interest, is thus presently held on behalf of the estate of the deceased in the current proceedings.

11. In the current proceedings the plaintiff, on behalf of the estate of the deceased, essentially seeks to have the first defendant account as a constructive trustee of the Redfern Property and proceeds of its sale traced into other property.

12. In the probate proceedings the Court is seized of a dispute, about competing entitlements to the intestate estate of the deceased, between Wing Tong Ip (the husband of the plaintiff in the current proceedings, who believes himself to be the son, the only identifiable child of the deceased) and Ms Guo, who claims (by reason of the disputed marriage of 26 April 2016) to be the widow of the deceased.

13. The paternity of Wing Tong Ip and the validity of the deceased’s marriage to Ms Guo are both in issue in the probate proceedings, presently listed for a hearing commencing on 20 September 2021. Neither issue is before the Court for determination in the current proceedings. Wing Tong Ip and Ms Guo are not parties in the current proceedings, although they have given evidence for the plaintiff and the first defendant respectively.

14. The plaintiff and the first defendant both adduced evidence bearing upon the validity of Ms Guo’s alleged marriage to the deceased as going to the credibility, or otherwise, of the first defendant. She was actively involved in arranging the marriage ceremony. It was nevertheless agreed between the plaintiff and the first defendant that the status of the marriage is not presently before the Court in these proceedings and that the plaintiff’s case does not depend upon a determination of the validity of the marriage.

15. The first defendant complains that the plaintiff has no standing to sue her on behalf of the estate of the deceased because, she contends, the plaintiff has no interest in the estate and the plaintiff’s husband is not a child of the deceased as he claims whereas, she contends, Ms Guo, as the deceased’s widow, is entitled to the whole of the estate under the intestacy provisions of Chapter 4 of the Succession Act 2006 NSW.

16. The plaintiff’s standing derives from the order of the Court appointing her as administrator of the deceased’s estate. The efficacy of that order does not depend upon the existence, or otherwise, of a family connection with the deceased. Despite the first defendant’s objection to the plaintiff’s standing, no application has been made by her for revocation of the order appointing the plaintiff as administrator.

17. If and to the extent that the plaintiff succeeds in these proceedings, relief granted to her will be granted to her in her representative capacity, not in her personal capacity. Property or compensation recovered from the first defendant will be held by the plaintiff on behalf of the estate of the deceased, subject to orders made by the Court for due administration of the estate.

18. In the absence of any other claimant, the likelihood is that the respective entitlements (if any) of the plaintiff’s husband and Ms Guo to the estate will be determined in the probate proceedings. The pendency of the probate proceedings is no impediment to a determination of these proceedings in advance of a determination of the probate proceedings.

THE NATURE AND CHARACTER OF THE DECEASED

19. To the observation of his general medical practitioner (Dr Dominic Pak), the deceased was an unsophisticated, poorly educated man who could not speak, read or understand English and who only ever conversed with him in Cantonese using a particular dialect derived from the Taishan District in China. Fluent in both Mandarin and Cantonese, Dr Pak never conversed with the deceased in Mandarin or heard the deceased speak in Mandarin.

20. The evidence of the plaintiff, her family and others (which I accept) is that the deceased did not speak or understand Mandarin. The first defendant (a Mandarin speaker) agrees that the deceased was a Cantonese speaker. She says that they were able to converse because she had some Cantonese. The marriage celebrant who presided over the purported marriage of the deceased and Ms Guo on 26 April 2016 conducted the ceremony in Mandarin, but the deceased “repeated his vows” in Cantonese. The weight of the evidence is that the deceased spoke only his particular dialect of Cantonese, and experienced difficulty in conversing with people who spoke only Mandarin. The probability is that in purportedly “repeating his vows” on 26 April 2016 he was prompted to do so.

21. Dr Pak had ample opportunities to observe the deceased between mid-1989 (his first attendance upon Dr Pak) and mid-2015 (shortly before the deceased was institutionalised, first by hospitalisation and then by admission to a nursing home). According to the doctor’s records, his last consultation with the deceased was on 22 June 2015, although on or about 4 August 2015 he received an assessment of the deceased’s personal circumstances by an Aged Care Assessment Team (“ACAT”).

22. Dr Pak remembered the deceased as, at times, a stubborn man who was often preoccupied with looking after his home in Redfern; a man who was difficult to follow and understand; a man who used very simple language in Cantonese to express himself and would speak slowly, only ever using simple concepts or words in conversation; and a man for whom Dr Pak used simple language and concepts in his communications with him in order to assist his understanding.

23. Throughout the time the first defendant knew the deceased (2013-2017) he was a pensioner and his principal, and only substantial, asset was (subject to any determination made in these proceedings) the Redfern Property.

THE CHARACTER AND CREDIT OF THE FIRST DEFENDANT

24. The first defendant was 20 years younger than the deceased and, throughout the time of their acquaintance, a person physically much more active than him.

25. She is an intelligent, sophisticated, determined, forceful and well-travelled woman. The deceased’s lack of sophistication, his poor education and his weak mind would have been obvious to her throughout their acquaintance. She could not have but known that he was vulnerable to exploitation, as was the fact. She deliberately took advantage of his vulnerability over about 4 years to secure his property for herself, isolating him as best she could from the plaintiff, her husband and their children, people he had recognised as family.

26. She has had a gambling habit (if not, more correctly, an addiction) since a time before she first met the deceased.

27. She does not deny this. Records of her gambling at The Star Casino in Sydney confirm it. She has, at least in the past, routinely gambled large sums of money. When she borrowed $150,000 from the Commonwealth Bank of Australia against the security of what had been the deceased’s family home before her arrival on the scene (the Redfern Property), the borrowed sum was paid by her to the Casino. She regularly travelled to interstate casinos for the purpose of gambling. She was in the habit of carrying gambling chips instead of money. After the commencement of these proceedings, she dissipated funds, in gambling, in contravention of asset preservation orders.

28. In giving evidence in these proceedings she presented as a superficially plausible witness, living a lie. In explaining how her relationship with the deceased commenced, and how he came to marry her and to make her a joint tenant of his home for no consideration, her profession of transcendent love did not ring true. Neither did her explanation of a mutually agreed divorce following her introduction of her former mother in law to the deceased or, as she says, her benign acceptance that she had been displaced in the deceased’s affections by her former mother in law. Her evidence that she paid $150,000 (or more) in cash to the deceased (in unquantified instalments at indeterminate times), justifying a family law settlement according to which the deceased purportedly divested himself of his remaining interest in his home in her favour, lacks corroboration except for formal acknowledgments by him in legal documents of doubtful validity.

29. Any affection she manifested for the deceased was concocted, brief and intermittent if judged against the amount of time she spent away from his company. Throughout the time of her acquaintance with the deceased she appears to have endeavoured to control the access other people may have had to him, and to have moved persistently towards acquisition of his principal asset, his home of many years, leaving him to life in a nursing home funded by his pension. In the process of acquisition of his property, she appears to have been less than frank with his nursing home, the Land Titles Office and the Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT) and the NSW Trustee, his financial manager.

30. Her insistence, in the teeth of objective evidence to the contrary, that the deceased never suffered from dementia undermines her credibility and her reliability as a witness of fact.

31. Plausible though she may have been in demeanour, on the determination of any critical question in these proceedings she is not a person to be believed on her oath without independent corroboration. Knowing that the deceased was vulnerable to exploitation, she set out to exploit him.

32. In reaching this view I have made allowances for the fact that the first defendant claims to have a poor grasp of English and she gave her evidence through an interpreter. I have also taken into account the possibility that some of the events she describes in her evidence have a cultural aspect to them that entitles her to an empathetic assessment.

PERSONAL RELATIONSHIPS

The Deceased’s Origins

33. The deceased died in Sydney on 23 August 2017, aged 84 years. He was born on 8 February 1933 in China.

34. The deceased may have married Cai (or Choi) Li in China in about 1959, but whether or not that was so is not clear on the evidence.

35. Between 1960 – 1975 or thereabouts the deceased lived in Hong Kong. He emigrated to Australia in 1975 and became an Australian citizen on 29 March 1985.

36. Wing Tong Ip’s evidence is that the deceased told him that he had an ex-nuptial daughter (named, perhaps, Wing Chi) living in Hong Kong, in addition to Wing Tong Ip, but that she had disclaimed the deceased and her present whereabouts, and correct name, are unknown.

The Deceased’s Putative Son, Wing Tong Ip and Family

37. At about the time the deceased moved from China to Hong Kong, Wing Tong Ip was, on 29 February 1960, born in China. He is also known as Yong Dong Ye.

38. Whatever may be the finding as to Wing Tong Ip’s paternity in the probate proceedings, this judgment proceeds on findings that the deceased openly acknowledged Wing Tong Ip as his son and that Wing Tong Ip, his wife (the plaintiff) and their children conscientiously believed the deceased to have been his father.

39. Evidence of the first defendant that the deceased did not mention this relationship to her, and that he introduced Wing Tong Ip to her only as “a friend”, does not (even if accepted) displace evidence of Wing Tong Ip and his family (which I accept) that they, in fact, enjoyed a familial relationship with the deceased.

40. At the invitation of the deceased, Wing Tong Ip migrated to Australia on 12 March 1988. Australian Government records show that he was sponsored by the deceased (named as his father), supported by the deceased’s then wife, Kiu Chai, and a job reference from Dorothy Quan, a witness for the plaintiff in these proceedings. He married the plaintiff, at the Redfern Property, on 10 January 1990.

41. Wing Tong Ip was introduced to the plaintiff by the deceased and his lifetime friend, her grandfather. She was born on 12 April 1966 in China. She has lived in Australia since her arrival on 17 March 1989.

37. Between the time of their marriage and the birth of the first of their two children the plaintiff and Wing Tong Ip lived with the deceased at the Redfern Property.

38. There are two children of the marriage: a son (James Ip), born in November 1990 and a daughter (Louise Ip), born in January 1997.

39. The evidence of Wing Tong Ip is that the deceased invited him, expressly as his son, to emigrate to Australia to live with him. The deceased was introduced to the plaintiff as the father of Wing Tong Ip and the plaintiff has, since that time, regarded the deceased as her father-in-law. The children of Wing Tong Ip and the plaintiff have grown to maturity regarding the deceased as their paternal grandfather.

The Deceased’s Marriage to Kiu Chai

45. Between 25 November 1980 and 9 June 2012 the deceased was married to Kiu Chai, a marriage terminated by her death. Dr Pak regularly treated both the deceased and Kiu Chai. He never knew the deceased to be with any partner or wife other than Kiu Chai.

46. Whether his marriage to Kiu Chai was the deceased’s first or second marriage may be the subject of debate bearing upon the paternity of Wing Tong Ip. It was, by any measure, the deceased’s deepest, happiest and longest experience of marriage. Kiu Chai was born on 7 September 1935 and became an Australian citizen on 6 March 1975. Shortly after their marriage he and Kiu Chai put down roots at the Redfern Property.

47. On or about 2 March 1981 the deceased and Kiu Chai, as joint tenants, purchased the Redfern Property as their matrimonial home. Memorandum No. S419761 dated 2 March 1981 was registered in their favour on 24 April 1981. By the time of Kiu Chai’s death in 2012, the property was unencumbered.

48. Upon the death of Kiu Chai on 9 June 2012 the deceased, as the surviving joint tenant, became entitled to be registered on the title of the Redfern Property as the sole proprietor. The signature of the deceased on Notice of Death registered No. AH991989 (dated and registered on 3 September 2013) was witnessed by the first defendant.

49. It was after the death of the deceased’s wife, Kiu Chai that the first defendant entered his life.

The First Defendant

50. The first defendant was born on 29 May 1953. She came to Australia on 16 January 1988. She became an Australian citizen on 8 April 1991.

51. She says that she first met the deceased in early 2013, at a time when each of them was mourning a spouse. Her husband, Tsan Si Cheng, had died on 21 December 2012. According to her evidence, she and the deceased came together in their grief, enjoyed each other’s company and decided upon a relationship. She says she commenced living at the Redfern Property in about April 2013, shortly after she met the deceased.

52. The evidence discloses that the first defendant had the following marriages before her marriage to the deceased:

1. Her first marriage, to Chuck Kai Luk, ended in divorce.

2. Her second marriage was to Haisheng Xu, a son of Ms Guo. It ended in divorce, by virtue of an order of the Federal Circuit Court of Australia made on 21 May 2002, effective on 22 June 2002.

3. Her third marriage was to Tsan Si Cheng. The marriage took place on 1 August 2004 (when the first defendant was aged 47 years and her husband was aged 68). It terminated with the husband’s death on 21 December 2012.

53. Although the first defendant commenced living at the Redfern Property in or about April 2013, throughout her relationship with the deceased (however it be characterised) she was often absent, travelling overseas. Those absences were explained by her as necessary to enable her to attend to litigation in Taiwan relating to Tsan Si Cheng’s deceased estate and trips to the United States to attend to her elderly parents.

54. The first defendant described the Taiwan litigation as an unsuccessful case (commenced by her husband Tsan Si Cheng before his death, continued by her after his death) to recover property from his daughter.

55. On the first defendant’s evidence, the deceased became weary of her many absences and turned to Ms Guo for companionship.

56. The plaintiff invites the Court to discern in the first defendant’s marriages a pattern of serial “gold digging” supportive of a finding (which is independently available) that the first defendant married the deceased as a means of acquiring his wealth. Her first husband was evidently a wealthy man, whose association with her may have exposed her to a high life and fed her gambling habit. Her third husband evidently had wealth enough for it to be the subject of litigation at or about the time of his death.

57. The circumstances of the second marriage are curious if only because of the first defendant’s continuing contact with her former husband – she leased the Redfern Property to him and, she says, she sold to him or his son a property acquired consequent upon her sale of the Redfern Property – not to mention her close relationship with her former mother-in-law, Ms Guo, the mother of her second husband.

58. In my opinion, the evidence does not rise high enough to support a finding, such as that for which the plaintiff contends, that the first defendant was a “serial gold digger”, marrying men for their money and moving on. Not enough is known of the circumstances of her various marriages to permit such a finding to be made. I decline to draw any inference against her based upon the number or nature of her marriages.

59. That said, the relationship between the first defendant and Ms Guo invites reflection of a different order. The plaintiff invites the Court to infer that the first defendant introduced Ms Guo to the deceased and engineered a form of marriage between them for the purpose of placing an impediment in the way of any investigation of, or challenge to, her acquisition of the Redfern Property.

60. Facts pointing in that direction include: the first defendant’s involvement of Ms Guo in the events of 6 July 2015, when a Binding Financial Agreement was executed making provision for the first defendant to acquire the Redfern Property outright; the fact of the first defendant’s leading role in arranging for the purported marriage of the deceased and Ms Guo on 26 April 2016; the fact that that marriage took place only after the first defendant, on 22 April 2016, became the sole registered proprietor of the Redfern Property; the fact that the first defendant did not disclose the Guo marriage to the NSW Trustee (on 6 July 2016) or NCAT (on 26 August 2016) at a time when, to her knowledge, enquires were being made as to the state of the deceased’s affairs; and the fact that, on her evidence, she continued from time to time to visit the deceased at his nursing home until the time of his death, thereby protecting her investment by playing the role of a bona fide former wife and keeping track of his whereabouts and welfare.

61. The plaintiff’s characterisation of the first defendant’s conduct represents an inference available on the evidence.

Ms Guo

62. Ms Guo appears to have been married (in 1955) only once before her disputed marriage to the deceased on 26 April 2016. She is a former mother-in-law of the first defendant. Her son, the first defendant’s second husband, and his son (her grandson), live in Australia.

DISPUTED LAND DEALINGS

63. The Redfern Property was ostensibly transferred by the deceased to the first defendant in two stages:

1. Central to the first stage was the deceased’s execution on or about 9 September 2013 of a memorandum of transfer (on 4 November 2013 registered as dealing number AI136200) effecting a transfer of the Redfern Property from him into the names of the first defendant and himself as joint tenants, for a declared consideration of $1.00.

2. Central to the second stage was a transfer of the Redfern Property into the sole name of the first defendant by registered dealing number AK376160, a Memorandum of Transfer dated and registered on 22 April 2016. The Memorandum of Transfer records a consideration of $1.00; but the Binding Financial Agreement dated 6 July 2015, pursuant to which the transfer was ostensibly effected, records a (disputed) payment of $150,000 in cash allegedly made by the first defendant to the deceased (by a series of payments, on unspecified dates, totalling $150,000) in return for the transfer.

64. The first Memorandum of Transfer was executed on or about 9 September, shortly after the deceased and the first defendant (on 3 September 2013) ostensibly married, apparently for the purpose of effecting a transfer of the property which (because the parties were married) was exempt from stamp duty. The first defendant arranged her marriage to the deceased, very quickly, after being told by the conveyancer Michael Li of a stamp duty exemption applicable to an intra-marriage transfer of land. The Transfer has a marking “no duty payable” dated 30 September 2013. It was lodged for registration by Mr Li.

65. The validity of the deceased’s marriage to the first defendant is in dispute. The plaintiff contends that he lacked the mental capacity to effect a valid marriage and to effect a valid transfer of the Redfern Property. As appears on the face of the Memorandum of Transfer, the conveyancer, Michael Li, purportedly acted for both the deceased and the first defendant on the transfer.

66. On any view, there was a close connection between the ceremony of marriage performed on 3 September 2013 and steps taken to change the title to the Redfern Property in ways favourable to the first defendant’s interests.

67. Immediately after the marriage ceremony, on 3 September 2013, the first defendant and the deceased attended the Land Titles Office. There the first defendant prepared, in her handwriting, two forms bearing the signature of the deceased. The first was a form entitled “Change of Name” registered as dealing number AH991988, intended to change the name of the deceased on the title to the Redfern Property so as to accord with the name recorded in his passport, a step recommended by an officer of the Land Titles Office. The second form, a “Notice of Death”, registered as dealing number AH991989, recorded on the register of titles the death of the deceased’s wife (Kui Chai Cheung) on 9 June 2012.

68. Although each form bears the signature of the deceased, it is plain from the documents, and their dealing numbers, that the first form was prepared in aid of the second. The first defendant caused both forms to be lodged for registration.

69. On 9 September 2013 the deceased and the first defendant met Mr Li. On his advice, a fresh Change of Name form (registered as dealing number AI3560) was lodged, by him, to correct the order in which the deceased’s several names were registered on the title. At that meeting the Memorandum of Transfer, undated but subsequently registered as the dealing AI136200, appears to have been executed by the deceased. Later that day the first defendant departed Australia for Taiwan, returning to Australia on 21 September 2013.

70. The second transfer (on 22 April 2016) was effected ostensibly to give effect to the Binding Financial Agreement dated 6 July 2015, allegedly made between the deceased and the first defendant consequent upon their “separation” on 15 May 2014 and in anticipation of their divorce (courtesy of an order of the Federal Circuit Court of Australia made on 22 September 2015) effective on 23 October 2015.

71. The plaintiff contends that the deceased lacked the mental capacity to enter the Binding Financial Agreement and to execute the Memorandum of Transfer pursuant to which the Redfern Property was transferred into the sole name of the first defendant.

72. The Binding Financial Agreement appears to have been drafted by Ren Zhou Lawyers. Ying Zhang of that firm signed a certificate that she had given independent advice about the Agreement to the first defendant. Yu Chen of Juris Cor Legal signed a certificate that she had given the deceased independent legal advice. Ms Zhang witnessed the signatures of the deceased and the first defendant on the Memorandum of Transfer dated 22 April 2016 and certified it as correct as solicitor for the first defendant.

73. If valid, the Binding Financial Agreement and the Memorandum of Transfer executed pursuant to the Agreement were manifestly improvident transactions even if (which I am not satisfied occurred) the first defendant paid $150,000 to the deceased in return for his interest in the Redfern Property. The first defendant had made no contribution to the marriage, either in financial or non-financial terms. She had brought no property to the marriage. She made no financial contribution to the marriage during its currency. She largely abandoned the deceased after their marriage except to the extent necessary to take control of the Redfern Property, leaving him with next to nothing. Throughout the term of the marriage she was overseas, away from the deceased, significantly more days than she was in his company. Even if in law a valid marriage, it was, in operation, unusual for its want of regular cohabitation.

74. Shortly after the Redfern Property was transferred into her name, the first defendant dealt with the property in a number of transactions:

1. on 1 May 2016 she leased the property to Haisheng Xu (Ms Guo’s son), her former husband, for seven months at a weekly rental of $650 payable in cash.

2. On or about 15 July 2016 she mortgaged the property to the Commonwealth Bank of Australia for $150,000. The Memorandum of Mortgage registered as dealing number AK606269 was dated 22 June 2016 and registered on 18 July 2016. The first defendant paid the borrowed $150,000 to the Star Casino.

3. on 24 August 2016 she sold the property for $1,050,000, from the proceeds of sale of which she repaid the Commonwealth Bank. The mortgage was discharged by registered dealing number AK696634, dated 9 August 2016 and registered on 24 August 2016. The Memorandum of Transfer effecting the sale was undated, but it bears a Land Title Office date of 19 August 2016. It was registered as dealing number AK696635 on 24 August 2016.

75. Following the first defendant’s sale of the Redfern Property she applied proceeds of the sale, inter alia, in the purchase of other property:

1. on or about 11 October 2016 she purchased a residential unit known as 315/243-271 Pyrmont Street, Pyrmont (folio identifier 479/SP50946) for $495,000. The Memorandum of Transfer that effected the purchase was dated 11 October 2016 and registered as dealing number AK834955.

2. on or about 16 November 2016 she purchased a garage space known as 153/360 Harris Street, Pyrmont (folio identifier 153/SP75156) for $34,000. The Memorandum of Transfer that effected the purchase was dated 16 November 2016 and registered as dealing number AK946631.

3. on or about 6 December 2016 she purchased a garage space known as 152/360 Harris Street, Pyrmont (folio identifier 152/SP75156) for $33,000. The Memorandum of Transfer that effected the purchase was dated 6 December 2016 and registered as dealing number AK987924.

76. The first defendant purchased a residential unit known as 100/313-364 Harris Street, Pyrmont (Folio Identifier 100/SP18021) for $615,000. The Memorandum of Transfer that effected the purchase was undated, but it bears a Land Titles Office date of 7 February 2018. It was registered as dealing number AN96956. The first defendant concedes that this property was purchased by her using the Pyrmont Street property as security for finance provided by the Commonwealth Bank of Australia.

77. Shortly after its purchase the first defendant leased the Pyrmont residential unit to Wah Chan for 18 months at $680.00 per week.

78. On or about 12 October 2018 (the date upon which she was appointed as a special administrator of the estate of the deceased) the plaintiff lodged caveat number AN7800782 against the title of the Pyrmont Street property (folio identifier 479/SP50946) and the two Harris Street garage spaces (respectively folio identifier 153/SP75156 and folio identifier 152/SP75156) claiming that those properties were held on a constructive trust for the deceased’s estate. By Court orders made in these proceedings on 11 and 18 February 2020 (given effect by dealing numbers AP893632 and AP910471, respectively, in the form of a “Request” to the Registrar General), the operation of the caveat was extended to the Harris Street property (folio identifier 100/SP18021) until further order.

79. The first defendant is currently registered as the proprietor of an estate in fee simple in each of the four properties the subject of the caveat. She holds the Pyrmont Street property and the two Harris Street garage spaces unencumbered, but subject to the caveat. On the face of the title to the Harris Street property her registration as proprietor of an estate in fee simple (by virtue of registered memorandum of transfer AN96956) is subject to a mortgage (registered dealing number AN96957) in favour of the Commonwealth Bank of Australia. The plaintiff’s caveat ranks after that mortgage.

80. The first defendant says that she sold the Harris Street property shortly after she purchased it (on a date variously said to be in February or May 2018), to her former husband Mr Haisheng Xu (or his son, Mr Tian Yun Xu, also known as Tanyong Shi and nicknamed “Yongyong”), because she could not afford to retain it. Completion of any such sale appears to have been impeded by the plaintiff’s caveat lodged against the title, but the Commonwealth Bank mortgage may have been paid out by a purchaser. The first defendant says that she sold the property for a price of $600,000 (incurring a loss on the sale) but that she received $620,000 because she borrowed $20,000 to pay expenses.

81. Evidence of Ms Guo, the mother of Haisheng Xu and grandmother of Yongyong, is that the “purchaser” behind Yongyong was his mother, a resident of Shanghai who funded the purchase.

82. The plaintiff submits that the fact that the first defendant purchased property in Pyrmont, after her sale of the Redfern Property, is significant because the property purchased at Pyrmont is close to The Star Casino, a venue frequented by her. In itself, this may not be significant. However, it is consistent with the plaintiff’s case that the first defendant was an inveterate gambler, had a gambling problem, and imposed herself on the deceased as a means of acquiring resources to feed her gambling habit. Whilst that evidence does not, of itself, establish the case against her, it does provide evidence of a motive on her part to acquire a benefit from the deceased’s property.

THE NATURE OF THE QUESTIONS IN DISPUTE

The Parties’ Competing Contentions

83. The plaintiff contends that, to the knowledge of the first defendant, the deceased lacked the mental capacity: (a) to effect a valid marriage with her; and (b) to transact business with her directed to transferring the Redfern Property to her.

84. In challenging the validity of property transactions, the plaintiff relies upon principles governing non est factum (Petelin v Cullen (1975) 132 CLR 355, PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 at 675D-E); mental incapacity (Gibbons v Wright (1954) 91 CLR 423 at 437-438, McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) (1904) 1 CLR 243 at 272, Hart v O’Connor [1985] AC 1000); unconscionability (Blomley v Ryan (1956) 99 CLR 362, Commercial Bank of Australia v Amadio (1983) 151 CLR 447, Louth v Diprose (1992) 175 CLR 621); undue influence (Johnson v Buttress (1936) 56 CLR 113) and a breach of fiduciary obligations (Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96-97). Essentially, the plaintiff contends that the first defendant (through a process of marriage, property settlement and divorce which took advantage of the deceased’s vulnerability to exploitation) unconscientiously acquired legal title to the deceased’s principal asset, the Redfern Property, and used it for her own benefit in disregard of the interests of the deceased.

85. The first defendant contends that, in marrying her and transacting business with her, the deceased at all times acted as a free and capable person. She denies that he ever had dementia. She contends, moreover, that he was the moving party for each of the land transfers made in her favour and that she simply acquiesced in those transfers after expressing a protest. She contends that the plaintiff and her husband were only ever motivated in their dealings with the deceased by a desire to acquire his wealth.

Categories of Transactions under challenge for want of Mental Capacity

86. There are four categories of transactions the validity of which is under challenge for a want of mental capacity on the part of the deceased.

87. The first in time relates to the purported marriage of the deceased to the first defendant on 3 September 2013 and, incidentally, to their application for divorce dated 6 July 2015, the “Divorce Order” made on 22 September 2015 and the parties’ divorce on 23 October 2015.

88. The second in time relates to the transfer by the deceased to the first defendant of an interest in the Redfern Property on each of 9 September 2013 and 22 April 2016 or thereabouts, incidentally involving his execution of the binding family law agreement on 6 July 2015.

89. The third category relates to the deceased’s purported execution of an enduring power of attorney on 25 November 2015 and an enduring guardianship appointment on 1 December 2015, execution of which was procured by the first defendant in aid of steps taken by her to transfer the Redfern Property into her name alone.

90. The fourth category comprises sundry documents executed in aid of that purpose: the joint statutory declaration made on 25 November 2015, the joint application for a replacement certificate of title signed on 25 November 2015 and the statutory declaration signed by the deceased on 2 April 2016.

91. In the plaintiff’s pursuit of recovery of property or compensation on behalf of the estate of the deceased, the primary focus for attention is on the second of these four categories. Each other category is in a sense incidental to it.

92. However, convenience attaches to an early consideration of the validity of the deceased’s marriage to the first defendant.

THE VALIDITY OF THE DECEASED’S MARRIAGE TO THE FIRST DEFENDANT

93. Under Commonwealth legislation (the Marriage Act 1961 Cth, section 23B(1)(d)(iii) and the Family Law Act 1975 Cth, section 51) a marriage is void, and may be declared a nullity, on the ground that the consent of a party to the marriage was not “real consent” because the party was “mentally incapable of understanding the nature and effect of the marriage ceremony.”

94. This Court has jurisdiction to declare a marriage invalid on either of two grounds:

1. as found by Young CJ in Eq in Privet v Vovk [2005] NSWSC 1258; 195 FLR 191, there is no limitation on the jurisdiction of the Court to make such a declaration in proceedings after the death of a party to the marriage; and

2. as found by Brereton J in Young v Lalic [2006] NSWSC 18; 197 FLR 27, the Court has jurisdiction under section 51 of the Family Law Act 1975 by virtue of the Jurisdiction of Courts (Cross-Vesting) Act 1987 Cth.

95. Brereton J’s judgment in Young v Lalic has been approved by the Court of Appeal in Grace v Grace [2014] NSWCA 86 at [17]; Eberstaller v Poulos [2014] NSWCA 211 at [19]; and Singh v Singh [2018] NSWCA 30 at [250].

96. In these proceedings, the jurisdiction exercised is that identified by Brereton J. However, even if the jurisdiction called in aid is that identified by Young CJ in Eq, the Court should recognise the gravitational pull of the Commonwealth legislation by exercising its jurisdiction in a manner consistent with the legislation and case law giving effect to it.

97. Section 23B of the Marriage Act does not require a person to have a detailed and specific understanding of the legal consequences of marriage in order to have the capacity to give a valid consent; however, mere awareness of going through a marriage ceremony is not enough , a person must also understand the nature and effect of the ceremony involved: AK v NC [2003] FamCA 1006; 32 FamLR 16; [2004] FLC 93-178; Oliver (deceased) v Oliver [2014] FamCA 57.

98. In my opinion, at the time of the marriage ceremony on 3 September 2013 the deceased was mentally incapable of understanding the nature and effect of the ceremony.

99. At the time of the alleged marriage, the deceased was an elderly, unsophisticated man suffering cognitive impairment, probably the result of vascular dementia. Evidence of his general practitioner, Dr Pak, and lay observers (including a long-time family friend, Dorothy Quan, and a long-time neighbour, Ling Zhen Liang, as well as the plaintiff, her husband and their children) provides a foundation for a finding of mental incapacity, as does the expert evidence of the geriatrician, Dr Tuly Rosenfeld.

100. The course of events detailed in chronological order confirms both a finding of incapacity to marry and a finding that the first defendant knew or ought to have known of his incapacity. In my assessment, the first defendant would have had actual knowledge of his incapacity, transparently incapable as he was. However, if I am wrong about that she ought to have known of his incapacity in the sense that she knew of facts that would have suggested incapacity in the mind of any reasonable observer. Within a very short time of meeting him, the first defendant led the deceased through a marriage ceremony the rationale of which was to enable her to take an interest in the deceased’s home without liability for stamp duty on the transfer executed by him in her favour. The transfer was effected within a very short time of the marriage ceremony and immediately thereafter the first defendant went overseas, leaving the deceased to his own devices. She was able to do so only because he lacked the mental capacity to appreciate what was happening. A relative stranger had rushed him into a marriage ceremony for her own financial gain, acquired an interest in his home for no consideration and promptly departed the scene without providing for his care.

101. Throughout the course of a short marriage the first defendant spent a very large amount of time away from the deceased. She was a “fly in-fly out” nominal wife. As a pretext for a divorce and property settlement, she introduced to the deceased her former mother-in-law, an elderly woman ordinarily resident in China.

102. The first defendant’s story that she and the deceased fell in love and, while she was travelling overseas, she was displaced in the deceased’s affections by her former mother-in-law, is incredible.

103. Disbelief of the first defendant’s story does not establish that the deceased was “mentally incapable of understanding the nature and effect of the marriage ceremony” of 3 September 2013 or, more generally, that he did not give “a real consent” to the marriage. Disbelief of evidence does not, of itself, establish the converse: Edmunds v Edmunds and Ayscough [1935] VLR 177 at 186-187.

104. However, the strong tendency of the lay, medical and expert evidence before the Court is that the deceased lacked capacity; and the conduct of the first defendant is consistent with treatment of the deceased as a person whose capacity to understand any complexity was non-existent. During her acquaintance with the deceased, from beginning to end, she acted in a manner calculated to take advantage of his vulnerability to exploitation.

105. Against this, the first defendant failed to call evidence which could go to the validity of the marriage. No evidence was adduced from the marriage celebrant, the two formal witnesses to the marriage ceremony, a photographer who attended the ceremony, her friend who introduced her to the deceased or others in whose company, she says, she and the deceased together enjoyed. I infer that their evidence would not have assisted her case.

106. A finding that the first defendant knew, or ought to have known, of the deceased’s incapacity is not an element required for a finding under section 23B(1)(d)(iii) of the Marriage Act that their marriage was void, although it may have significance upon consideration of the validity of property transactions predicated upon the first defendant’s contention that she was the deceased’s wife.

107. In my opinion, the marriage was void within the meaning of section 23B of the Marriage Act 1961 Cth and it is open to the Court to make a declaration under section 51 of the Family Law Act 1975 Cth to the effect that it was a nullity.

108. The “Divorce Order” made on 22 September 2015, purporting to terminate the marriage was predicated upon a formal finding that “the marriage is proved”. The first defendant contends that this is sufficient to ground an estoppel precluding the plaintiff from challenging the validity of the marriage.

109. The first defendant’s contention is misconceived. A void marriage cannot be validated by an order for its dissolution: In the Marriage of Miller (1983) FLC 91-328; 9 FamLR 10; 49 ALR 689; Hayward v Hayward [1961] P 152 at 158-159. No estoppel operates against a Court exercising matrimonial causes jurisdiction to determine the truth as to the validity of a marriage: Thompson v Thompson [1957] P 19; Law Society of NSW v Weaver [1977] 1 NSWLR 67 at 73-74.

EVIDENCE AS TO THE DECEASED’S (IN)CAPACITY GENERALLY

110. Whether the deceased had the mental capacity to perform a particular function, at a particular time, depends upon an assessment of his condition at the particular time.

111. Gibbons v Wright (1954) 91 CLR 423 at 437-438 provides authoritative guidance to an assessment of mental capacity. In their joint judgment Dixon CJ, Kitto and Taylor JJ observed that the validity of particular instruments depended upon the possession by parties to those instruments of a degree of understanding relative to the nature of that which they were doing. Their Honours continued:

“The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation. …

…[T]he mental capacity required by the law in respect of any instrument is relative to the particular transaction which is being effected by means of the instrument, and may be described as the capacity to understand the nature of that transaction when it is explained. As Hodson LJ remarked [in Estate of Park [1954] P 112 at 136], ‘one cannot consider soundness of mind in the air, so to speak, but only in relation to the facts and the subject-matter of the particular case’.

Ordinarily the nature of the transaction means in this connection the broad operation, the ‘general purport’ of the instrument; but in some cases it may mean the effect of a wider transaction which the instrument is a means of carrying out. …”

112. These observations have been taken in these proceedings to provide the principle upon which the Court should judge the deceased’s capacity, from time to time, to transfer property and execute legal documentation of the character under challenge in the proceedings.

113. A finding that the deceased lacked capacity for self-management at the time he entered his nursing home (or at some earlier or later time) is not necessarily inconsistent with a finding that he had capacity at that time to perform a particular function. The concept of “(in)capacity for self-management”, as presently applied upon an exercise of protective jurisdiction in NSW, is functional, not limited to a case of mental incapacity: David by her Tutor the Protective Commissioner v David (1993) 30 NSWLR 417 at 426E and 436E-437C; Protective Commissioner v D (2004) 60 NSWLR 513 at [93]; PB v BB [2013] NSWSC 1223 at [8]-[9]; CJ v AKJ [2015] NSWSC 498 at [27].

114. The evidence before the Court as to the deceased’s mental capacity from time to time includes evidence of lay observations, evidence of his treating doctors and evidence of medical records. Records of his time in hospital and his nursing home include evidence of aberrant, aggressive and confused behaviour consistent with mental illness. As Dr Pak attests, even before the death of his wife Kiu Chai on 9 June 2012, the deceased was in poor health, suffering from dementia, unable to manage the medication of his wife and himself and given to wandering aimlessly. The plaintiff’s evidence is that at or about this time the deceased was often confused, forgetful, disinclined to shower and maintain a clean house, prone to lose things and to get lost, and experiencing difficulties in dealing with money in everyday circumstances. After his wife’s death he was disoriented, often confused, given to wandering, reclusive (often confining himself to his room) and living in decrepit conditions. Dorothy Quan noticed that at about this time he became aggressive, making silly allegations against people. These characteristics reinforced his natural lack of sophistication, his illiteracy and a stubborn streak. Evidence of Ms Guo confirms that, when she stayed at the Redfern Property, he was reclusive, poorly groomed and incontinent.

115. All that evidence has to be taken into account. However, in the forensic contest between the plaintiff and the first defendant the parties took the evidence of Dr Tuly Rosenfeld as crystallising questions for determination by the Court as to the deceased’s mental capacity to perform particular functions in their temporal setting.

116. In his report dated 18 June 2020, Dr Rosenfeld addressed as follows questions stated for his opinion (here extracted, with editorial adaptation, in a form reproduced in the plaintiff’s written submissions) about the capacity of the deceased to perform particular functions:

A. First Alleged Marriage (3 September 2013)

1. As at the date of marriage on 3 September 2013 between the Late Mr Ip [the deceased] and Tsui Peng Chiang [the first defendant], was Mr Ip capable of understanding the nature and effect of the marriage contract into which he was entering?

2. As at the same date was Mr Ip capable of appreciating the nature and specific consequences of the marriage contract, namely that it is an engagement between a man and a woman to live together and love one another as husband and wife to the exclusion of all others?

3. Is it more probable than not that at the time of the marriage Mr Ip had a "mere awareness" rather than a full understanding and appreciation of going through a marriage ceremony?

Short answer: Mr Ip was, in September 2013, suffering from dementing illness likely vascular brain disease with significant frontal lobe disease and impaired executive function. He would not have been able to properly understand consider or resolve issues, implications and consequences of his decisions to marry. As a consequence of the presence of chronic progressive dementia Mr Ip would not have been able to understand the implications and consequences of the commitments that he would have made through a marriage ceremony.

B. Transfer of the Half Share of Cooper Street Property (9 September 2013, as found)

4.    As at September 2013 (exact date unknown), being the date that he allegedly signed the Transfer of the Half Share of the Cooper Street Property, was Mr Ip capable of understanding:

a. in general terms the value of the half share of the Cooper Street Property he was giving away?

b. of the risks, benefits and consequences of gifting a half share of the Cooper Street Property away in terms of his lifestyle and accommodation?

c. …what he was doing both in terms of his future needs and his estate?

d. could he understand the document/transfer he was being asked to sign?

Short answer: Mr Ip was, in September 2013, suffering from a dementing illness likely vascular brain disease with significant frontal lobe disease and impaired executive function. He would not have been able to properly recall the background, understand, consider and resolve the complexities of the implications and consequences of the financial arrangements that he undertook through the alleged signing of the papers and documents transferring a half share of the property.

C. Binding Family Law Agreement (6 July 2015)

5.    As at 6 July 2015, being the date that he allegedly signed the Binding Family Law Agreement was Mr Ip capable of understanding:

a. in general terms the value of what he was giving away to Chiang and what he was to receive under the settlement?

b. …the risks, benefits and consequences of the terms of settlement set out in the Binding Family Agreement in terms of his lifestyle and accommodation?

c. …what he was doing both in terms of his future needs and his estate?

d. could he understand the document and related declarations he was being asked to sign?

Short answer: Mr Ip was, by 2015, suffering from the progression of a severe chronic dementing illness. It is unlikely and improbable that Mr Ip would have been able to understand, consider and resolve the issues necessary to make decisions about the nature, implications and consequences of a family law agreement. Mr Ip was suffering at that time from advanced dementing illness that would have extinguished his ability to understand and consider his future needs, care and estate. It is improbable that even if he was provided with support and explanation that he would have been able to understand, retain information he was provided and recall the circumstances of his needs. Mr Ip was suffering from likely vascular brain disease with significant frontal lobe disease and impaired executive function. He would not have been able to properly recall the background, understand, consider and resolve the complexities of the implications and consequences of the financial arrangements that he undertook through the alleged signing of the papers and documents transferring a half share of the property.

D. Enduring Power of Attorney (25 November 2015)

6.    As at 25 November 2015, being the alleged date that he signed the enduring power of attorney was Mr Ip capable of understanding:

a. the extent of the attorney’s authority, namely that the attorney Chiang will be able to sign any document necessary to apply for a replacement of the certificate of title (4/33976); to apply for authority for the issue of a citizenship certificate in Australia by executing all necessary documents and to do everything in connection with his nursing home;

b. the circumstances in which the attorney Chiang has his authority;

c. the continuing operation of the power of attorney notwithstanding his subsequent loss of mental capacity; and

d. the absence of any authority to revoke the power of attorney if he lacks mental capacity to do so.

Short answer: Mr Ip from at least 2013 was suffering from progressive, chronic and worsening dementing illness that affected his recall, reasoning, executive function and his ability to weigh and consider the issues, implications and consequences arising from the appointment of an Enduring Power of Attorney. the progression of a severe chronic dementing illness.

E. Joint Statutory Declaration (25 November 2015)

7.    As at 25 November 2015, being the date that he allegedly signed the Joint Statutory Declaration before solicitor, Ying Zhang, was Mr Ip capable of understanding:

a. in general terms, the matters that he was attesting to set out in each paragragh of that statutory declaration;

b. the purpose and proposed use of that statutory declaration;

c. the potential impact of that declaration on his legal and financial position/affairs;

d. could he understand the declaration he was being asked to sign?

Short answer: As indicated above, Mr Ip was by the end of 2015 suffering from advanced dementia and had been determined to require and had been discharged to full time care in an aged care residential facility.

F. Joint Application for replacement of Certificate of Title (25 November 2015)

8.    As at 25 November 2015, being the date that he allegedly signed the Joint Application for replacement of Certificate of Title before solicitor, Ying Zhang, was Mr Ip capable of understanding:

a. in general terms the nature of the application;

b. the purpose and proposed use of that application;

c. the potential impact of that application and subsequent issue of the replacement certificate of title on his legal and financial position/affairs?

d. could he understand the application that he was being asked to sign?

Short answer: As indicated above, by the end of 2015, Mr Ip was suffering from advanced dementia, had been determined to require and been discharged to full time care in an aged care residential facility.

G. Appointment of Enduring Guardian (1 December 2015)

9.    As at 1 December 2015, being the alleged date that he signed the appointment of enduring guardian was Mr Ip capable of understanding:

a. that Chiang would be authorised to make the following personal decisions for him such as where he lived; what health care he received; what kind of personal services he received; what dental treatment he received and who he should have access to together with whether physical restraints should be used against him to protect himself during any period in which they had lost their capacity, even if they subsequently regained their capacity;

b. the circumstances in which Chiang has his authority;

c. the continuing operation of the enduring guardianship notwithstanding his subsequent loss of mental capacity; and

d. the absence of any authority to revoke the enduring guardianship if he lacks mental capacity to do so.

Short answer: As indicated above, Mr Ip was by the end of 2015 suffering from advanced dementia and had been determined to require and had been discharged to full time care in an aged care residential facility. Lifestyle, healthcare and accommodation decisions require that an individual has considerable insight into the nature of the problems, needs, the implications of decisions regarding medicines, procedures, accommodation options and a range of complex issues. Mr Ip would not have understood the implications of appointing another person who would be able to make those decisions on his behalf.

H. Further Statutory Declaration by Mr Ip (2 April 2016)

10. As at 2 April 2016, being the date that he allegedly signed the Further Statutory Declaration before JP, Willa Huaging Zheng, was Mr Ip capable of understanding:

a. in general terms, the matters that he was attesting to set out in each paragragh of that statutory declaration;

b. the purpose and proposed use of that statutory declaration;

c. the potential impact of giving that declaration on his legal and financial position/affairs;

d. could he understand the declaration he was being asked to sign?

Short answer: As indicated above, Mr Ip was by the end of 2015 suffering from advanced dementia and only a month after this time after consideration of his capacity by NCAT, the Public Trustee [sic] was appointed to manage his financial affairs. Mr Ip would not have had the required capacity to recall the details of his situation and consequently understand and consider those matters.

I. Transfer of Second Half Share to Cooper Street Property (22 April 2016)

11.    As at 22 April 2016, being the date that he allegedly signed the Transfer of the Second Half Share of the Cooper Street Property, was Mr Ip capable of understanding:

a. in general terms the value of the half share of the Cooper Street Property he was giving away?

b. …the risks, benefits and consequences of transferring a further half share of the Cooper Street Property away to Chiang in terms of his lifestyle and accommodation?

c. …what he was doing both in terms of his future needs and his estate?

d. could he understand the document/transfer he was being asked to sign?

Short answer: As indicated above, Mr Ip would not have been able to comprehend and consider the financial implications and the consequences of his transfer of the half share of his property even in general terms.

J. Second Alleged Marriage (26 April 2016)

12.   As at the date of marriage on 26 April 2016 between the Late Mr Ip and Guo Langying, was Mr Ip capable capable of understanding the nature and effect of the marriage contract into which he was entering?

13.    As at the same date was Mr Ip capable of appreciating the nature and specific consequences of the marriage contract, namely that it is an engagement between a man and a woman to live together and love one another as husband and wife to the exclusion of all others?

14.    Is it more probable than not that at the time of the marriage Mr Ip had a "mere awareness" rather than a full understanding and appreciation of going through a marriage ceremony?

Short answer: As indicated above, Mr Ip’s advanced brain disease and dementia would have resulted in his inability to properly understand and consider… the nature and implications of a marriage ceremony.”

117. In forming the opinions here expressed, Dr Rosenfeld took into account the medical records of Dr Pak; admission, progress and discharge records of St Vincent’s Hospital; the deceased’s RUDAS test score of 20/30 on 27 July 2015 (indicative of dementia); and the results of CT scans of the deceased.

118. In cross-examination Dr Rosenfeld described “dementia” as a syndrome in which one or more cognitive functions is impaired and that impairment has affected the demented person’s ability to function in the world or to function socially.

119. He explained that a person might be able to do a range of high-level tasks notwithstanding dementia. To have dementia does not necessarily mean that a demented person is incompetent and living in a nursing home. Such a person can be living at home independently, still performing routine tasks despite significant dementia. All depends on what part of a brain’s function has been impaired by dementia.

120. Dr Rosenfeld’s opinion as to the existence, and duration, of the deceased’s dementia was not displaced by evidence that some medical records described the deceased’s dementia as “mild”. Nor was it displaced by an assumption that the conveyancer and solicitors who attended to the deceased in relation to particular transactions (and two marriage celebrants and witnesses to marriage ceremonies) did not notice the deceased’s dementia.

121. Dr Rosenfeld’s independent assessment of the deceased’s mental state drew particularly on the observations of Dr Pak, the observations of medical professionals charged with treating the deceased in hospital and in his nursing home, and the nature and complexity of the transactions ostensibly effected by the deceased between 2013 and 2017 or thereabouts.

122. He demonstrated, with particular reference to a brain scan of the deceased taken on 15 July 2015, a substantial wastage in the deceased’s brain tissue. The scans of the deceased’s brain demonstrated that there was a cause for significant atrophy in the brain, most likely due to blood vessel disease. Whether or not the deceased suffered a stroke at the time he was admitted to St Vincent’s Hospital was not, of itself relevant to the deceased’s impairment of executive function, long established.

123. As outlined here, and in relation to particular dates listed in the “Narrative Statement of Facts” set out hereunder, I accept as correct Dr Rosenfeld’s analysis of the evidence bearing upon the deceased’s mental capacity to perform transactions attributed to the deceased in and following 2013.

CONSEQUENCES OF A FINDING OF MENTAL INCAPACITY

124. A finding that the deceased lacked mental capacity to perform those transactions may not, of itself, be sufficient to ground an order that the transactions be set aside. An element of knowledge by the first defendant of the deceased’s incapacity might also be necessary.

125. Upon an application of principles governing a finding of non est factum, mental incapacity preventing any understanding at all of a transaction will mean that there was in truth no entry into the transaction by the incapacitated person: PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 at 675D-E. In such a case there can be no question of a positive belief on the part of the incapacitated person as to the nature of an impugned transaction radically different from its true nature, or of carelessness, an element ordinarily required as a foundation for a finding of non est factum: Petelin v Cullen (1975) 132 CLR 355 at 359-360.

126. A person who seeks to avoid a contract on the ground of his or her insanity, must plead and prove, not merely his or her incapacity, but also his or her opponent’s knowledge of that fact, and unless he or she proves those two things he or she cannot succeed: McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) (1904) 1 CLR 243 at 272; Hart v O’Connor [1985] AC 1000 at 1019B-1022C, 1024D-H and 1027F-H.

127. In Lampropoulos v Kolnik as Executor of Foley [2010] WASC 193 at [350] Simmonds J proceeded on the basis that the degree of knowledge of mental capacity required to challenge the validity of a transaction on the ground of a want of capacity is not limited to “actual knowledge”, it being sufficient if the party dealing with the incapacitated person “ought to have known of the mental incapacity”.

128. As in that case (at [388] et seq), the element of knowledge required might take its colour from equitable principles governing a catching bargain (unconscionable dealing) in which knowledge of a person’s special disadvantage will be satisfied if the party dealing with the disadvantaged person is aware of facts which would raise the possibility of special disadvantage (mental incapacity) in the mind of any reasonable person: see Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 467.

129. As the facts of the current proceedings lend themselves to characterisation as an unconscientious taking advantage of a person at a special disadvantage, that degree of knowledge can reasonably be taken here as a measure of the knowledge of incapacity sufficient to impugn a transaction.

130. This is consistent with an observation in McLaughlin (1904) 1 CLR 243 at 272 that the equitable doctrines governing the validity or invalidity of a contract made with an insane person may be only a particular instance of general doctrines relating to fraudulent contracts, an observation affirmed in Hart v O’Connor [1985] AC 1000 at 1027G-H in the following terms: “…the validity of a contract entered into by a lunatic who is ostensibly sane is to be judged by the same standards as a contract by a person of sound mind, and is not voidable by the lunatic or his representatives by reason of ‘unfairness’ unless such unfairness amounts to equitable fraud which would have enabled the complaining party to avoid the contract even if he had been sane.”

131. Whether or not that statement of principle is too broad (as, I apprehend, it may be), in the context of the present proceedings the principles governing avoidance of a transaction on the ground of mental incapacity can be taken as operating in parallel with the principles governing unconscionable dealings articulated in Blomley v Ryan (1956) 99 CLR 362, Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 and Louth v Diprose (1992) 175 CLR 621, amongst other authoritative judgments.

132. It is not necessary to explore an application of equitable principles relating to undue influence (closely related to principles governing relief against unconscionable dealing, as noted in Amadio (1983) 151 CLR 447 at 474), the principles governing non est factum (recognised in Ford (by his Tutor Watkinson) v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42 as not necessarily incompatible with a finding of incapacity) or fiduciary obligations. Justice can be done in the current proceedings by an application of the principles governing incapacity and those governing relief against unconscionable dealings operating in parallel.

133. If I have erred in finding that the deceased lacked “mental capacity” to transact particular business, he was nevertheless (to the knowledge of the first defendant) at a special disadvantage vis-à-vis her: he was vulnerable to exploitation, at her instigation, on account of his lack of sophistication, education and literacy; his traumatised emotional state following the death of his wife, Kiu Chai; and his cognitive impairment. What attracted the first defendant to the deceased was his possession of wealth, his vulnerability to exploitation and the opportunity those two characteristics afforded her to take advantage of him to acquire the Redfern Property for virtually nothing.

THE NATURE OF THE EVIDENCE ADDUCED IN THESE PROCEEDINGS

134. Much of the evidence adduced in these proceedings was documentary. It included instruments obtained upon search of records kept by the Registrar General; certificates of births, deaths and marriages; immigration and travel records; medical records produced by the deceased’s general medical practitioner (Dr Pak), St Vincent’s Hospital and the deceased’s nursing home; banking records; and documents produced by The Star Casino. It included also documents of record relating to proceedings in the Federal Circuit Court of Australia and the Guardianship Division of NCAT.

135. The principal witnesses on behalf of the plaintiff were the plaintiff herself; her husband, ostensibly the son of the deceased; the deceased’s general medical practitioner, Dr Pak; and friends and neighbours, Dorothy Quan and Ling Zhen Liang. Dr Tuly Rosenfeld, a geriatrician, gave evidence about the deceased’s mental capacity as a forensic expert. All of the witnesses called by the plaintiff and cross examined by the first defendant presented as witnesses of truth. None of the plaintiff’s witnesses warrant an adverse finding as to their credit. Their evidence is generally consistent with contemporaneous documentation from independent sources.

136. The first defendant’s principal witnesses were herself and her former mother in law, Ms Guo, together with a Conveyancer (Michael Li) and two solicitors (Ying Zhang and Yu Chen) who acted on transactions affecting the deceased and herself.

137. As earlier noticed, the first defendant personally was not a credible or reliable witness of fact.

138. Nor was Ms Guo a reliable witness, making due allowance for her age, constraints of language (giving evidence through an interpreter) and cultural differences. In cross examination she claimed a poor memory and confused events. She embraced speculation that the deceased received $150,000 in cash from the first defendant at the time of execution of the Binding Financial Agreement, and that he may have dissipated it all over a period just over a week or so in partying with friends, a matter she claimed to have been of no concern to her despite the fact that at that time (according to her evidence and that of the first defendant) she intended to marry the deceased. Her evidence does nor ring true.

139. In opposing protective orders affecting the deceased on 26 August 2016, the first defendant told NCAT that the deceased had told her that he had given the $150,000 to Ms Guo, an unlikely story and one not corroborated by Ms Guo.

140. Of the professionals with whom the deceased came into contact, the evidence of Mr Li (Conveyancer) and Ms Zhang (Solicitor) was not altogether reliable. Both had a paucity of contemporaneous records. Their evidence, particularly that of Ms Zhang, appears to have involved a strong element of reconstruction. Mr Li, in particular, disclaimed any real memory of long ago events. Neither, particularly Ms Zhang, appears to have had much appreciation of the possibility of conflict between the interests of the deceased and the first defendant when implicitly acting for both parties or the first defendant alone. Both appear to have seen the first defendant and the deceased together and to have taken their instructions principally, if not only, from the first defendant, subject to Ms Zhang’s formality of referring the deceased to Mr Chen for “independent legal advice” on the Binding Financial Agreement.

141. Ms Zhang tended to deflect criticism of her, and to accept personal professional responsibility only begrudgingly, by attributing documents to a junior solicitor or a clerk working under her supervision. She appears to have seen nothing incongruous about her acceptance on 3 December 2015 that the deceased lacked capacity to execute an enduring guardianship appointment on 1 December 2015 and her procuring of a statutory declaration from the deceased on 25 November 2015; she refused to accept that, if the deceased lacked capacity to sign an enduring guardianship appointment on 1 December 2015, there was a reasonable possibility that he may also have lacked capacity to make a statutory declaration on 25 November 2015.

142. She also saw no incongruity in her lodgement with the Land Titles Office on 13 April 2016 of a statutory declaration purportedly made by the deceased on 2 April 2016 after the time when (no later than 3 December 2015) she was explicitly on notice that the deceased was suffering from dementia.

143. That she saw the events of 6 July 2015 (when both the Binding Financial Agreement and a Memorandum of Transfer in favour of the first defendant were executed) as a formality was confirmed by her failure to provide a copy of the Memorandum of Transfer to Mr Chen or to tell him that it had been executed by both the deceased and the first defendant, in her presence, as a preliminary to the deceased being referred to him for “independent legal advice”.

144. Although Mr Li was a reluctant, hesitant witness, with little memory of events that occurred in 2013, his evidence is significant, and consistent with objective facts, to the extent that he confirmed that in 2013 he saw the first defendant and the deceased twice; that he told them on the first occasion that a stamp duty exemption was available if they were married; that they went away from his office on that occasion with the benefit of that advice; and that they returned to his office on 9 September 2013 with a marriage certificate dated 3 September 2013.

145. In my assessment, Mr Chen was an honest witness. In retrospect, he would have acted more prudently had he, in light of his reservations about the Binding Financial Agreement, simply refused to witness the deceased’s signature or to provide a certificate of independent advice. This is what he should have done. The quality of any advice he was able to give the deceased was less than required if the deceased had been competent to comprehend it, which I find was not the case. Mr Chen’s intervention in the deceased’s affairs was inadequate to establish that the deceased was able to give, and did give, a fully informed consent to the Binding Financial Agreement. However, he gave evidence in a measured way, conscious of an obligation to assist the Court.

146. In recording that assessment, I place no great significance on evidence of a solicitor for the plaintiff (Mr Gary Patterson) that, when investigating the factual matrix of these proceedings, he had a telephone conversation with Mr Chen in which Mr Chen asserted that the payment of $150,000 for the deceased’s interest in the Redfern Property was “reasonable”. I do not exclude the possibility that, when cold called, Mr Chen might have inadvertently said something of the character of that attributed to him by Mr Patterson. However, I accept his evidence that that was a view that he never held.

147. For completeness, I mention that two deponents relied upon by the first defendant (Zhiwen Di and Hai Ping Wang) were not cross examined on short affidavits in which they deposed to their belief that the deceased did not exhibit any symptoms of dementia or reveal that he had, or may have had, a son or family members other than the first defendant, their friend. The first of those witnesses was a Cantonese speaker, who deposed that the deceased understood Mandarin. The second was a Mandarin speaker who deposed that the deceased could understand him completely. Their evidence is not directed to any of the transactions disputed in these proceedings. It is at odds with other, independent evidence. It does not carry much weight in light of that other evidence.

148. A challenge to the validity of particular transactions requires an examination of the factual context of each particular transaction under challenge. In the circumstances of the current proceedings, that requires a chronological account of the facts of the case in a perspective broader than the impugned transactions. The first defendant engaged the deceased in a series of transactions commencing with their void marriage and extending to the time when she secured registration as the sole proprietor of the Redfern Property.

261. The first defendant departed Australia on 5 January 2016, returning on 16 February 2016.

262. On 11 January 2016 the Manager of the deceased’s nursing home contacted Cliff Luke (nominated by the first defendant as an alternate contact for herself as a representative of the deceased, but he disclaimed the role). He told the Manager that he was not aware of any arrangement that he serve as an alternate and that he barely knew the deceased.

263. On 26 February 2016 the first defendant executed a statutory declaration (witnessed by Ms Zhang) which included the following paragraphs:

“1. I am the registered proprietor of [the Redfern Property].

2. I became the registered proprietor with my Husband, Lo Sing Ip, on or around September 2013.

3. I have made numerous attempts to find and allocate the Certificate of Title at our home but have failed.

4. The only registered proprietors are myself and my and my Husband, Lo Sing Ip and we are the only persons in possession of the land …”

264. The terms of this statutory declaration were false in that the deceased was not the first defendant’s husband at the time the declaration was made, and any implicit suggestion that the two of them were living together at the Redfern Property was less than frank in circumstances in which the deceased was a permanent nursing home resident.

265. Ms Guo returned to Australia on 2 March 2016, departing on 18 May 2016.

266. On 19 March 2016 the first defendant (in the company of Ms Guo and a marriage celebrant) attended upon the deceased at his nursing home and procured his execution of a “Notice of Intended Marriage” in anticipation of a marriage between the deceased and Ms Guo to be solemnised on 26 April 2016.

267. An entry for 1 April 2016 in the Notes of the deceased’s nursing home (by Dr Yu Zhang) records the following:

“

Behaviour problems worsen – refer to BAMS team.

Request to Apply Guardianship Tribunal for his [the deceased’s] financial […], and medical decision. I am aware that he has appointed LISA as his POA in 11/2015 (Need to query if he was capable to appoint the POA at that time). I am wondering if the POA need to be revoked before we apply to Guardianship Tribunal unless we only apply for his medical care…”

268. Another entry in the nursing home’s Notes for 1 April 2016 records that the first defendant was informed “Management is lodging a Guardianship for Mr Ip.”

269. On or about 2 April 2016 the first defendant took the deceased to Chatswood, where she procured his execution of a statutory declaration in terms that included the following:

“1. I am one of the registered proprietor of the [Redfern Property].

2. I have made numerous attempts to find and allocate the Certificate of Title at our home but have failed.

3. The other registered proprietor is my wife, Tsui-Peng Chiang and we are the only persons in possession of the land.

…

6. I consent to the Application made by Tsui-Peng Chiang, application AK252409, for a replacement Certificate of Title.”

270. The terms of this statutory declaration were false, most obviously in their statement that the first defendant and the deceased were married at the time the declaration was purportedly made. The terms of the document are, moreover, consistent with the deceased having no capacity or understanding required to make such a declaration. The document is an illustration of the first defendant’s control over the deceased and his inability to grasp what was happening.

271. The deceased lacked capacity to execute a statutory declaration or to consent to the first defendant’s application for a replacement Certificate of Title. His advanced dementia precluded him from understanding the statutory declaration, the first defendant’s application for a replacement Certificate of Title and any idea that he consent to the application. Even if fully explained to him, he would not have understood these things.

The Deceased becomes subject to Guardianship Proceedings

272. In April 2016 applications were filed in the Guardianship Division of NCAT relating to the deceased:

1. On 6 April 2016 the Facility Manager of the deceased’s nursing home applied for a guardian and financial manager to be appointed.

2. On 15 April 2016 the plaintiff applied to be the deceased’s financial manager and guardian.

273. Those applications were dealt with on 26 May 2016 and 26 August 2016. On the first occasion, the Tribunal appointed the NSW Trustee as the deceased’s financial manager (by an order to be reviewed within three months) and appointed the plaintiff as his guardian for three months. The necessity for appointments of limited duration arose from a communication received by the Tribunal on 18 May 2016, from the first defendant, requesting an adjournment of the hearing scheduled for 26 May 2016. On the second occasion (26 August 2016) the Tribunal confirmed the NSW Trustee’s appointment as financial manager and appointed the plaintiff as guardian for a period of three years.

274. On 7 April 2016 Dr Pak provided to the plaintiff a “Patient Health Summary” which recorded the following:

“This is to certify that I have been attending Mr Ip for the past 20 years until June 2015. He had few medical problems [listed in the Summary] but was getting more and more confused and unable to look after himself in the last couple of years when he sustained many falls and injury to himself. He has quite a stubborn personality and often pre-occupied in looking after his house. I believe that he can no longer look after his own affairs.”

The First Defendant secures registration as Sole Proprietor of the Redfern Property

275. On 13 April 2016 the first defendant caused to be lodged at the Land Titles Office an “Application of Replacement of Certificate of Title” (dealing number AK252409) in respect of the Redfern Property. The Application was made by the first defendant and certified as correct, and lodged, by Ms Zhang on her behalf. The Application itself was dated 2 February 2016. It annexed the following statutory declarations:

1. The statutory declaration of the first defendant made on 26 February 2016, earlier extracted.

2. Another statutory declaration made by the first defendant on 26 February 2016 in which she confirmed that she was known by the following names: “Lisa Tsui Peng Chiang; Chiang, Tsui-Peng; Chiang, Tsuipeng Lisa; Chiang, Lisa Tsuipeng; and Chiang, Tsui-Peng Lisa. As with the first of the first defendant’s statutory declarations dated 26 February 2016, this one was witnessed by Ms Zhang.

3. A statutory declaration made by Michael Li on 11 March 2016 (before Ms Zhiang) in which he recorded that he had received the Title Certificate to the Redfern Property when the first defendant’s name was added as a proprietor; he had since given that Title Certificate to “the proprietors”; and he had been unable to locate the Title Certificate in his ofice.

4. The statutory declaration purportedly made by the deceased at Chatswood on 2 April 2016 (earlier extracted) in which he is said to have searched without success for the Certificate of Title.

276. The first defendant departed Australia on 13 April 2016, returning on 19 April 2016.

277. On 22 April 2016 the first defendant, by Ren Zhou Lawyers, lodged with the Land Titles Office a “Change of Name” Application (dealing number AK376161) to change her name on the title to the Redfern Property from “Tsui-Peng Chiang” to “Lisa Tsui Peng Chiang”. The dealing included a statutory declaration made by the first defendant on 19 April 2016 (before Ren Zhou) in which she declared that “when I received by [sic] Australian citizenship, I adopted an anglo saxon name to assimilate into the culture.” [She became an Australian citizen on 8 April 1991.]

278. On 22 April 2016 the Registrar General:

1. registered as dealing number AK376160, a Memorandum of Transfer dated 22 April 2016, purportedly signed by both the deceased and the first defendant in the presence of Ms Zhang, providing for a transfer of the Redfern Property from the names of the deceased and the first defendant into the sole name of the sole defendant for a consideration expressed to be $1.00;

2. registered the first defendant’s Change of Name Application (dealing number AK376161); and

3. delivered to Ren Zhou Lawyers a new edition of the certificate of title for the Redfern Property in the name of the first defendant (Lisa Tsui Peng Chiang) as the sole registered proprietor.

279. The deceased lacked capacity to execute the Memorandum of Transfer dated 22 April 2016. By that date, his severe dementia prevented him from understanding the nature, effect, terms or consequences of the instrument. Even if fully explained to him, he would not have understood these things. He was transparently unable to comprehend them.

280. No notice was given to the plaintiff, her husband or NCAT of the transfer of the Redfern Property into the first defendant’s sole name.

The Deceased’s purported marriage to Ms Guo

281. On 26 April 2016 the deceased purportedly married Ms Guo before a marriage celebrant (Xiauhong Li), with two witnesses (Zhiwen Di and Youling Wang), at the deceased’s Chatswood nursing home. Documents in support of the marriage comprise:

1. A “Declaration of No Legal Impediment to Marriage” dated 26 April 2016 purportedly signed by the deceased as well as Ms Guo.

2. A statement of “Particulars” completed and signed by the celebrant.

3. A document entitled “Official Certificate of Marriage” purportedly signed by the deceased as well as the first defendant and by the witnesses and the celebrant.

4. A registered form of “Marriage Certificate”.

282. In each of these documents (and in the Notice of Intended Marriage said by the celebrant to have been received by him on 19 March 2016) the deceased and Ms Guo are both said to have resided at the Redfern Property.

283. There is no entry in the Notes of the deceased’s nursing home that refers to the deceased’s impending marriage or the marriage itself. Entries for 24, 25 and 27 April 2016 record that the deceased was on each day physically aggressive towards staff. There was no entry for 26 April 2016.

284. Ms Guo confirmed in her evidence that nobody at the nursing home was told of the marriage. Her explanation was that had she told anybody she would have been required, according to Chinese tradition, to give them a gift, which she was unable or unwilling to do.

285. No evidence was adduced in these proceedings from either of the two witnesses to the marriage. The marriage celebrant (Xiaochong Li) gave evidence to the effect that: (a) he was told that the deceased was in the nursing home because he was recovering from a fall; (b) he did not see anything that made him suspect that the deceased had a mental incapacity; (c) during the ceremony the deceased continually complained that he was very unhappy in the nursing home and that he wanted to get out and live normally; (d) he spoke to the deceased and Ms Guo in Mandarin, all parties telling him that the deceased understood Mandarin; and (e) the deceased “repeated his vows partly in Cantonese”.

286. The evidence is silent as to whether the marriage was consummated.

287. It was the first defendant who made arrangements with the marriage celebrant for the marriage, both the preliminary meeting with the celebrant to give notice of intention to marry and the marriage ceremony itself. The ceremony, such as it was, occurred only because of the arrangements she made, including the provision of transport for Ms Guo. That said, she says that she did not attend the marriage ceremony because she was “very sad that the deceased was marrying another woman.” More likely, she sought to distance herself from the event as it happened.

288. The plaintiff knew nothing of the marriage until after the commencement of these proceedings.

289. A determination of the validity of the marriage is not required in these proceedings. The question of validity remains to be litigated, as between Wing Tong Ip and Ms Guo, in the probate proceedings presently listed for hearing on 20 September 2021. Nothing in this judgment is intended to preclude that contest taking place.

290. The case presented on behalf of the plaintiff in these proceedings, against the first defendant, includes a contention that the marriage was invalid because of a want of mental capacity on the part of the deceased. The first defendant contends that no finding as to the validity of the marriage is necessary in these proceedings. For the purpose only of resolving any contest as between the plaintiff and the first defendant in these proceedings, I find that the contention of the plaintiff is made out on the evidence presently before the Court. On that evidence, the deceased’s advanced brain disease and dementia would have resulted in a patent inability on the deceased’s part properly to understand and consider the nature and implications of a marriage ceremony. As it happened, any contact between the deceased and Ms Guo, before or after the purported marriage, was fleeting, a factor inconsistent in ordinary experience with any real appreciation of the nature, effect and consequences of a marriage ceremony by a man suffering advanced dementia.

291. Australian Government records recording Ms Guo’s movements in and out of Australia record the following:

1. She arrived in Australia on 25 December 2013 and departed on 22 March 2014.

2. She arrived in Australia on 3 June 2015 and departed on 1 September 2015.

3. She arrived in Australia on 2 March 2016 and departed on 18 May 2016.

4. She did not return to Australia before the death of the deceased on 23 August 2017.

292. Ms Guo says that she left Australia after the marriage to have an operation in China, and that her poor health thereafter prevented her return to Australia. There is no evidence that she took any steps to have the deceased travel to China to live with her, as (she says) was the intention of the deceased and herself when they agreed to marry.

293. It cannot be assumed that Ms Guo stayed at the Redfern Property at any particular time during her presence in Australia. She had children of her own resident in Australia, one of whom was Haisheng Xu, the first defendant’s former husband.

The First Defendant’s dealings with the Redfern Property during the currency of Guardianship Proceedings affecting the Deceased

294. By a “Standard Form Residential Tenancy Agreement” made (and dated) 1 May 2016, the first defendant leased the Redfern Property to her former husband Haisheng Xu, for a 7 month term commencing on 1 May 2016 and ending on 30 November 2016, for rent of $650 per week payable to the first defendant by cash.

295. The first defendant contends that Haisheng Xu did not remain at the Redfern Property for the full term but left after a few days because he could not bear the smell of cats resident inside the premises.

296. On 6 May 2016 the first defendant drove the deceased and Ms Guo to the plaintiff’s residence at Maroubra, purportedly seeking to recover the deceased’s passport. The plaintiff was not at home. Her husband answered the door, at which time the first defendant remonstrated with him loudly. The plaintiff’s son, James, responded to the commotion by calling the police, who supervised the plaintiff’s departure from the premises.

297. The first defendant departed Australia on 18 May 2016, returning on 2 June 2016.

298. On 18 May 2016, as earlier noticed, Ms Guo departed Australia and did not return at any time before the deceased’s death.

299. On 26 May 2016, as earlier noticed, the Guardianship Division of NCAT appointed the NSW Trustee as financial manager of the deceased and the plaintiff as his guardian.

300. On or about 20 June 2016 the first defendant applied to the Commonwealth Bank for a loan of $150,000 on the security of the Redfern Property, then registered in her sole name. On 22 June 2016 she signed a Memorandum of Mortgage (registered on 18 July 2016 as dealing number AK606269) in favour of the Bank to secure the loan. She paid the borrowed funds to The Star Casino.

301. On 6 July 2016, at the request of the NSW Trustee (then investigating the affairs of the deceased as his financial manager), the first defendant attended an office of the NSW Trustee with the deceased. A file note of that attendance records that the deceased advised the NSW Trustee that he did not have a son and never had children; that he was happy with the transfer of the Redfern Property to the first defendant; and that he had given $150,000 (which the first defendant had paid to him) to his “girlfriend” Ms Guo, who only came to Sydney to spend time with him.

302. On the face of the file note, the first defendant was an active participant in the NSW Trustee’s interview. She is recorded as speaking disparagingly of the plaintiff, advising the NSW Trustee that she had filed for divorce because the deceased was in a relationship with Ms Go, but that she still had feelings for the deceased, she did not object to him returning to live at the Redfern Property and she had borrowed $150,000 from a relative in Taiwan to pay the deceased as required by the Binding Financial Agreement.

303. The file note records that the deceased “had very limited English”. More likely than not, the “facts” it records represent a story told by the first defendant rather than any independent statement on the part of the deceased. By that time he was suffering severe dementia and unable to manage his own affairs.

304. The first defendant did not disclose to the NSW Trustee that the deceased had purportedly married Ms Guo on 26 April 2016.

305. The first defendant departed Australia on 30 July 2016, returning on 3 August 2016.

306. Upon her return, she effected a quick sale of the Redfern Property, off market, without any advertising and without notice to the plaintiff, the family of the plaintiff or NCAT. She said she did so because she was afraid to live there alone, especially with Ms Guo back in China. She suggested, also, that the decision to sell the property was made by her jointly with the deceased, an unlikely proposition.

307. On 24 August 2016 the Registrar General registered:

1. a Memorandum of Discharge (dealing number AK696634) in respect of the Commonwealth Bank mortgage; and

2. an undated Memorandum of Transfer (dealing number AK696635) recording a transfer of the Redfern Property by the first defendant to Matthew John Rumble (a neighbour) for an expressed consideration of $1,050,000, from which the Commonwealth Bank mortgage was paid out.

308. On 26 August 2016, as earlier noticed, the Guardianship Division of NCAT conducted a hearing that culminated in confirmation of the orders made by the Tribunal on 26 May 2016, appointing the NSW Trustee as the deceased’s financial manager and the plaintiff as his guardian.

309. The first defendant participated in that hearing, during the course of which she contended: (a) that the deceased did not require a financial manager or guardian; and (b) that she had paid the deceased $150,000 in connection with the Redfern Property. She did not disclose to the Tribunal, the NSW Trustee or the plaintiff and her husband that she had granted a lease of the Redfern Property for cash or that she had sold the property during the pendency of the Tribunal proceedings. Neither did she disclose to the Tribunal (or anybody else associated with the Tribunal proceedings) Ms Guo’s purported marriage to the deceased or invite Ms Guo to participate in the Tribunal proceedings.

The First Defendant’s Application of Proceeds of Sale of the Redfern Property

310. As earlier recorded, following her sale of the Redfern Property, and before the death of the deceased on 23 August 2017, the first defendant applied proceeds of the sale of the property:

1. on or about 11 October 2016, in purchase of the Pyrmont Street property;

2. On or about 16 November 2016, in the purchase of a garage space in Harris Street, Pyrmont; and

3. on or about 6 December 2018, in the purchase of a second garage space in Harris Street, Pyrmont.

311. The first defendant departed Australia on 16 November 2016, returning on 24 November 2016.

311. The first defendant departed Australia on 11 January 2017, returning on 15 January 2017.

312. The first defendant departed Australia on 10 March 2017, returning on 13 March 2017.

Death of the Deceased and further developments

314. The deceased died in his nursing home on 23 August 2017. The guardianship and financial management orders affecting him ceased to operate on his death.

315. The first defendant says that she learnt of the deceased’s death when she visited his nursing home on or about 25 August 2017.

316. A funeral service was held for the deceased on 31 August 2017. The plaintiff and her husband paid $10,990.45 for it. Neither the first defendant nor Ms Guo attended the funeral, sent flowers or offered condolences. Neither offered to pay for the funeral. The first defendant says she was not told of the date of the funeral by the plaintiff, who had assumed the role of the deceased’s guardian. There is no evidence that she made any enquiry of the plaintiff.

317. Shortly after the deceased’s death the first defendant purchased a residential unit in Harris Street, Pyrmont using the Pyrmont Street property as security for a loan from the Commonwealth Bank of Australia, a property which the first defendant says she has since sold.

318. On 12 October 2018 the plaintiff was appointed as a special administrator of the estate of the deceased.

319. On or about 12 October 2018 the plaintiff lodged a caveat (dealing AN7800782) against the title of the Pyrmont Street property and the two Harris Street garage spaces.

320. By Court orders made in these proceedings on 11 and 18 February 2020, the operation of the caveat was extended to the Harris Street property until further order.

ANALYSIS: DRAWING THREADS TOGETHER

321. For reasons earlier explained, I find that the deceased (to the knowledge of the first defendant) lacked capacity:

1. to marry the first defendant on 3 September 2013;

2. to execute a Memorandum of Transfer of the Redfern Property on 9 September 2013, the Binding Financial Agreement dated 6 July 2015 and the Memorandum of Transfer dated 22 April 2016 pursuant to which the first defendant ultimately became the sole registered proprietor of the Redfern Property; and

3. to execute documents, and to give instructions, incidental to steps taken by the first defendant to acquire the Redfern Property for herself.

322. For reasons earlier stated, I find that the first defendant had knowledge of the deceased’s incapacity in relation to each of these transactions, at least to the extent that she was aware of facts that would have suggested to any reasonable observer that the deceased lacked mental capacity to transact the business at hand. On my assessment of the first defendant, she had actual knowledge of the deceased’s incapacity. However, if I am wrong about that, she had knowledge sufficient to establish that she ought to have known.

323. Each of the impugned transactions was an unconscionable dealing on the part of the first defendant (liable to be set aside) in that: (a) the deceased was, at the time of each transaction, suffering from a special disadvantage vis-à-vis the first defendant; (b) that special disadvantage seriously affected the deceased’s capacity to judge or protect his own interests; (c) the first defendant knew of the deceased’s special disadvantage, or at least of facts which would raise that possibility in the mind of any reasonable person; (d) the first defendant took advantage of the opportunity presented by the deceased’s special disadvantage by calculated steps to divest him of the Redfern Property, his principal asset; and (e) that taking of advantage was unconscientious, the transactions by which the first defendant acquired the Redfern Property being demonstrably improvident viewed from the perspective of the deceased.

324. In finding that the impugned transactions were liable to be set aside as unconscionable dealings, I acknowledge that equitable intervention could equally be justified by reference to principles governing undue influence and breaches of fiduciary obligations. Whilst purporting to care for the deceased, the first defendant had and exercised for her own benefit a psychological ascendancy over the deceased, dominating any decision-making of which he was otherwise capable in the process of securing substantially all his wealth for herself. Nothing in the parties’ relationship could justify such a transfer of wealth. The deceased was not capable of giving, and did not give, a fully informed consent to the impugned transactions. In light of my findings of unconscionability, it is not necessary to elaborate alternative forms of equity available to the deceased’s estate.

325. These findings are sufficient to justify the imposition of a constructive trust on the first defendant’s acquisition of the Redfern Property, attaching to her dealings with the property, including the proceeds of its sale traced into subsequently acquired property. Her title to the property was acquired in such circumstances that she could not in good conscience retain a beneficial interest in the property, as a consequence of which she should be found to have held title as a constructive trustee for the deceased and, as such, liable to account to his estate for her dealings with his property: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 108; Muschinski v Dodds (1985) 160 CLR 583 at 615-616; Giumelli v Giumelli (1999) 196 CLR 101 at 111-112.

326. By imposition of a constructive trust, and the taking of such accounts as may be necessary, the first defendant must account to the estate of the deceased for his property.

327. On the taking of accounts, the first defendant is obliged to account for all rents, profits or benefits received by her from her lease or use of the Redfern Property. The object of taking of accounts is to strip her of gains unconscionably made by her at the expense of the estate of the deceased: Phillips v Robab Pty Ltd [2014] NSWSC 1520; (2014) 110 IPR 184 at [175]-[176]; Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1 at [75]. She is not entitled to a credit for monies paid into court by other defendants as compensation for losses suffered by the estate. There is no inconsistency between an order that she account for “profits” and the estate’s receipt of compensation from parties unrelated to her. Her obligation is to disgorge gains unconscionably made by her at the expense of the deceased’s estate.

328. In the unlikely event that the estate recovers more than its loss there may, possibly, be a contest about competing entitlements to the surplus (the plaintiff having disclaimed an entitlement to more than the estate’s loss, including costs), but that is at present a theoretical possibility at best.

329. Prima facie, on the taking of accounts the deceased’s estate might expect to recover at least the sum of $1,050,000 for which she sold the Redfern Property in August 2016. To the extent that those funds cannot be traced into other property, the estate will be entitled to equitable compensation.

330. A complaint by the first defendant that representatives of the deceased were guilty of laches because of delay in the commencement of enforcement proceedings following the appointment of the NSW Trustee as a financial manager on 26 May 2016 goes nowhere: see, generally, Meagher, Gummow and Lehane, Equity Doctrines and Remedies (5^th edition, 2015), chapter 38. Allowance must be made for difficulties associated with an investigation of the affairs of an incapable person whose family relationships were not straight forward, and the first defendant appears not to have altered her position in the meantime, each of the properties acquired by her using proceeds of sale of the Redfern Property being the subject of a current caveat. Enforcement of the equitable entitlements of the estate of the deceased involves no injustice to the first defendant.

331. A constructive trust having attached to the first defendant’s interests in the Redfern Property (culminating in her registration as sole proprietor of the property), it is not necessary for there to be formal orders declaring the invalidity of intermediate transactions purportedly effected by the deceased.

332. However, for more abundant caution and as a formal means for articulating the Court’s reasons for judgment, I propose to make declarations of the effect that:

1. the marriage between the deceased and the first defendant on 3 September 2013 was a nullity; and

2. the deceased lacked the mental capacity to execute the Memorandum of Transfer (executed on or about 9 September 2013) subsequently registered as dealing number AI13620, the Binding Financial Agreement dated 6 July 2015 and the Memorandum of Transfer (dated 22 April 2016) subsequently registered as dealing number AK376160.

333. There is utility in a declaration that the marriage between the deceased and the first defendant was a nullity beyond a formal articulation of the Court’s reasons for judgment. Such a declaration would operate against any application made by the first defendant (out of time) for a family provision order against the estate of the deceased under Chapter 3 of the Succession Act 2006 NSW. Whether or not the first defendant could establish that she is an “eligible person” within the meaning of section 57(1) of the Succession Act 2006 on a ground other than status as a “former spouse”, recognition of the invalidity of her marriage to the deceased would operate against any purported reliance upon the marriage. Given that she procured the marriage in aid of her acquisition of the Redfern Property, and as an integral part of the process of acquisition, it would be unconscionable for her to hold herself out as once married to the deceased. A declaration of nullity is, accordingly, appropriate.

334. I reserve for consideration whether an order can or should be made in these proceedings for correction of the register kept under the Births, Deaths and Marriages Registration Act 1995 NSW. Young CJ in Eq made such an order in Privet v Vovk [2005] NSWSC 1258; 195 FLR 191 at [33].

335. In addition to declarations about the void marriage and land dealings, I propose to declare that the first defendant at no time paid the sum of $150,000 (referred to in the Binding Financial Agreement dated 6 July 2015), in cash or otherwise, to the deceased.

336. Each of the foreshadowed declarations is relatively formal, given the findings made in these reasons for judgment. The core relief to which the plaintiff is entitled comprises:

1. a declaration to the effect that whatever interest the first defendant held in the Redfern Property was held by her upon trust for the deceased;

2. a declaration to the effect that the proceeds of sale of the Redfern Property received by the first defendant in respect of Memorandum of Transfer dealing number AK696635 were held by the first defendant upon trust for the deceased;

3. an order that the first defendant account to the estate of the deceased for:

1. all rents, profits or benefits received by her from her lease or use of the Redfern Property; and

2. the proceeds of sale of the Redfern Property by the first defendant;

4. an order that, in the taking of accounts, interest on all funds received by the first defendant in respect of the Redfern Property be calculated on the wilful default basis; and

5. in light of the first defendant’s admission that proceeds of sale of the Redfern Property were applied by her in the acquisition of the residential unit known as 315/243-271 Pyrmont Street, Pyrmont and the garage spaces respectively known as 152 and 153/360 Harris Street, Pyrmont, a declaration that those properties are held on trust for the estate of the deceased, coupled with consequential orders for those properties to be vested in the estate.

337. I remain open to what, if any, specific orders should be made in relation to the residential unit known as 100/313-364 Harris Street, Pyrmont, currently the subject of a caveat in favour of the deceased’s estate, but possibly the subject of a third party claim by a purchaser from the first defendant.

338. As presently advised, I see no necessity for formal orders upholding the plaintiff’s challenge to the validity of the power of attorney dated 25 November 2015 and the guardianship appointment dated 1 December 2015, neither of which appears to have any ongoing practical significance in light of other relief to be granted and the fact of the death of the deceased.

339. Consideration needs to be given to what, if any, orders should be made for ongoing administration of the estate of the deceased (including enforcement of orders against the first defendant) pending the determination of the probate proceedings between Wing Tong Ip and Ms Guo.

CONCLUSION

340. I propose to allow the parties an opportunity to be heard as to the form of orders to be made to give effect to this judgment and as to costs.

341. Prima facie, costs follow the event (Civil Procedure Act 2005 NSW, section 98; Uniform Civil Procedure Rules 2005 NSW, rule 42.1), as a consequence of which, in the absence of any countervailing submission, an order will be made that the first defendant pay the plaintiff’s costs of the proceedings.

342. Whether there is a need to make orders consequential upon subsisting interlocutory orders (including a freezing order affecting the first defendant made on 12 October 2018) is a topic upon which I invite submissions.

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Decision last updated: 06 July 2021